Call Buying Rises in Western Digital

Updated from 2:17 a.m. EDT with disclosure information

By Pete Najarian, co-founder of OptionMonster

Western Digital (WDC Quote) saw heavy trading in both stock and options Monday ahead of its earnings report after the market closes Tuesday.

Western Digital ended the regular session up 3.5% to $31.47 and rose another 1.3% in after-hours trading. The price is now more than triple the lows of November and more than double the lows of March.

Options trading was active early in the August 32 calls, which saw volume double in a matter of minutes Monday morning, according to OptionMonster's real-time tracking systems. By the end of the day more than 5,500 calls had changed hands at the strike, eight times the open interest, for prices ranging from 95 cents to $1.45.

Western Digital's shares would need to rise between 4.7% and 6.2% for those calls to turn a profit by the time they expire on Aug. 21. Western Digital calls at all strikes outnumbered puts by more than 12 to one on Monday.

The data storage sector has been on an extraordinary run, with stellar performance among several names. Last Wednesday, Seagate Technology (STX Quote) raised its forecasts for margins and overall industry sales, citing a larger-than-expected increase in corporate demand for computers.